Swiss Envoy to U.S. Resigns After His Report on Holocaust Dispute Is Disclosed

By DAVID E. SANGER

Published: January 28, 1997

WASHINGTON, Jan. 27—
Switzerland's Ambassador to the United States resigned today after the publication of a long diplomatic cable in which he advised his Government to make up its mind about how to deal with disclosures about its role as banker to Nazi Germany, and concluded with a warning that ''this is a war which Switzerland must conduct on the foreign and domestic front, and must win.''

The Ambassador, Carlo Jagmetti, a longtime Swiss diplomat who was scheduled to retire this summer, also concluded his strategy paper with a warning that the groups representing Holocaust victims seeking recompense from Swiss banks are ''opponents'' who ''cannot be trusted.''

Today, in a letter to the Swiss President and the federal councillors who have struggled in recent weeks to contain the controversy, Mr. Jagmetti said he regretted ''having offended the sensibilities of Jewish groups and the public with some expressions in the report,'' some of which he said were ''misconstrued.''

''It was never my intention to want to gloss over events which occurred in the years before, during and after World War II or to question the necessity of openly coming to terms with the past.''

In fact, in an interview with The New York Times a week ago Mr. Jagmetti complained that his Government had vacillated between a policy of confrontation and conciliation with Jewish groups and the American officials, including Senator Alfonse D'Amato, the New York Republican, who have pressed the Swiss Government and its banks to allow a thorough review of their dealings with Nazi Germany and the accounts opened by Holocaust victims. But he had the air of a diplomat who, from a post far from his own capital, was having trouble getting the attention of his own Government.

Mr. Jagmetti's memo was written on Dec. 19, well before the decision by the Swiss Government last week to accede to demands that it set up a compensation fund for elderly Holocaust victims who may not live long enough to see the results of historical research that is now under way in the United States and Europe.

But the Swiss Government declined to say how big the fund would be, leading to speculation that Switzerland was mounting a campaign to stem the damage to its reputation, but was still wavering on how to solve what has become one of its biggest foreign policy crises in years.

Most of Mr. Jagmetti's cable dealt with his advice that Switzerland recognize that the dispute over charges that it laundered Nazi gold -- and its treatment of Holocaust victims, survivors and their descendants -- was ''going to be a long affair'' that could take years to resolve. It will trigger, he said, ''difficult soul-searching.''

In laying out the options facing his Government, he said, ''If you thought that Jewish circles and Senator D'Amato could be quickly satisfied, and you want to do a deal to get this solved, that is one way of looking at it.'' But he doubted the questions would go away even if such a deal was struck.

It was the references to Switzerland's need to conduct a ''war'' and his disparaging remarks about the character of those pressing Switzerland that got the diplomat in trouble. The Clinton Administration was quick to denounce his comments.

''If it's true that the Swiss Ambassador made these remarks, it betrays a fundamental lack of understanding about the commitment that the United States Government has to its own citizens and to the search for justice for people who had their human rights fundamentally violated during the Second World War,'' said Nicholas Burns, State Department spokesman. ''It's very troubling.''

Mr. Jagmetti's cable marked the second time in less than a month that a senior Swiss official's comments have fueled the fire that the country insists it is trying to douse.

At the end of February the country's outgoing President, Jean-Pascal Delamuraz, accused Jewish groups of trying to ''blackmail'' Switzerland into creating a compensation fund. Mr. Delamuraz, now the Economics Minister, later apologized for that comment. But he did not withdraw his accusation in the same interview that the United States and Britain were using the controversy to destroy Switzerland as a world financial center.

In his interview at the Swiss Embassy here 10 days ago, Mr. Jagmetti described Mr. Delamuraz's comments as ''a major mistake,'' but attributed them to the Swiss reaction to ''an artillery fire that comes constantly, the grenades exploding all around'' in the forms of the discovery and re-discovery of old documents detailing links between the banks and the Third Reich.

He was also critical of Mr. D'Amato, who has selectively released some of those recently declassified documents, saying the Senator is ''considered rather aggressive in Switzerland.'' In contrast, Mr. Burns said at the State Department that the New York Senator is ''doing the Lord's work'' in pressing the Swiss Government to answer questions that have long been kept at bay.

Mr. D'Amato said in a telephone interview today that Mr. Jagmetti ''did the right thing by resigning.''

''One person in the Swiss Government saying this kind of thing, of course that is not right. But the Ambassador? It goes way over the line. It shows an attitude.''

While Mr. Jagmetti apologized for his cable, his letter of resignation today expressed outrage that it had leaked. He demanded an investigation, a step that Mr. D'Amato and others compared to the Swiss moves to investigate the security guard who disclosed two weeks ago that the Union Bank of Switzerland was shredding documents that go back to World War II. American Jewish groups have said they will raise funds to defend the guard if he is prosecuted.